Yes Bank's recent fund-raise is credit positive and will help strengthen its capitalisation that will support credit growth, Moody's Investors Service has said.
Yes Bank last week had informed about raising Rs 4,906.65 crore (USD 750 million) in Qualified Institutions Placement (QIP) mode.
The fund will strengthen its capital buffer and also boost its loss-absorbing buffers, Moody's said.
"The capital increase is credit positive because it strengthens the bank's capitalisation and loss-absorbing buffers and supports the bank's credit growth," the global ratings firm said in a note.
"We estimate the capital raise will increase bank's common equity tier 1 (CET1) ratio by about three percentage points to 12.9 per cent. The additional capital will support bank's solvency amid continued balance sheet expansion."
The agency also hoped that Yes Bank will grow its risk weighted assets by 30 per cent each year in fiscal 2017 and fiscal 2018, in line with growth over past three years.
Factoring in these growth assumptions, Moody's estimates Yes Bank's CET1 ratio at about 12.4 per cent at the end of March 2017 and 11.2 per cent at the end of March 2018.
These are significantly above regulatory minimum CET1 requirement of 7.375 per cent at the end of March 2018.
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